Retail hospitality covid grant and Universal credit

susieh1989

Hi there,
myself and my partner have a universal credit claim. He has a cafe business which has just passed its first year- he has just been given a £25K retail hospitality grant by the government due to covid-19; does anyone know how this affects our universal credit claim (eg is it classed as income or disregarded or?) I have asked on the UC journal and tried to phone but they’re incredibly busy so I’ve had no response. My concern is that I’m currently on long term sick due to a health condition and we have young children, we rely on the UC money especially with my partner unable to work right now too due to covid-19, and the 25K is for his business not for our rent or food and household bills so I worry they will class it as income and therefore we receive no help. Thanks in advance x

sharpe106

Do you have a seperate buisness account?

susieh1989

Yes he does x

susieh1989

I mean, he has one business account and we have one joint personal account- not two business accounts to clarify x

calcotti

Like you I cannot find any guidance on this. However there is clear guidance that the Self Employed Income Support Grant will be treated as earnings for UC. I think there would be similar guidance if the intention was for the hospitality grant to also be treated as such. Given the lack of guidance and the purpose of the grant I think it possible that it will be treated as a business asset in which case it would have no impact on UC. However I cannot confirm whether this is correct or not.

susieh1989

Thankyou Calcotti, I take it you’re going through similar? It’s a minefield and I’ve spent the day googling, and quite anxious about it all. We have to fill in his UC self employed in/outgoings tomorrow for the assessment period which you do every month and we don’t know whether to include it or not and ofcourse want to not be penalised but as you say, there’s no information out there on this and the DWP are too busy to respond. Added stress! X

calcotti

susieh1989 said:

I take it you’re going through similar? 

No, fortunately not - just trying to find an answer to your question.

susieh1989

Thankyou I appreciate that x

Jeremy535897

I'm no expert on UC, unlike Calcotti, but I take comfort from the guidance to DMs on capital disregards, that says that business assets are excluded indefinitely:
"H2022 Business assets include standard items such as machinery, vehicles, fixtures and cash held in the bank (including money held following the sale of assets). They may also include items such as customer lists and contacts, current and future contracts and goodwill."

Recently DWP have apparently confirmed that cash held to pay future known self assessment tax liabilities can be disregarded, even if held in a personal bank account.

But of course the other issue is whether the grant itself is income or capital for UC. Its one off nature, and the fact that it is not stated as specifically designed to replace income (unlike SEISS), points to capital, although for tax purposes such undifferentiated (either income or capital but not clearly one or the other) grants are usually income. Indeed, we know it is to be taxed as income, according to the FAQs to local authorities, but so are lump sums taken from pension schemes that are in flexible drawdown, which can be capital for UC. Those FAQs state that the grant's focus on property occupying businesses is because those businesses typically have high fixed costs (again a pointer to income rather than capital).

The FAQs are at  https://www.south-norfolk.gov.uk/sites/default/files/Covid-19-Grant-Funding-FAQ-Apr20.pdf (ignore the South Norfolk reference; it is of wider application) and the main one dealing with taxation is at:
12. Will these grants be taxed? Yes, the Small Business Grants, and Retail, Hospitality and Leisure Grants will be subject to tax. However, businesses that make a loss this financial year will pay no tax on the grants. Only profitable businesses will be taxed, and it is right that they contribute to our vital public services at this time.

susieh1989

Thankyou Jeremy, you and Calcotti have been very helpful and although none of us know for definite, your research have greatly reassured my anxious mind, I appreciate your help x